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Fixed-term employment agreements in professional sports?

On 17 February 2016 the Rhineland-Palatinate Labour Court (Case 4 Sa 202/15) in its function as the Court of Appeal ruled that the fixed-term employment agreement between the German Bundesliga club 1.FSV Mainz 05 and its goalkeeper Heinz Müller was effective and therefore ended on 30 June 2014. The first instance, the State Labour Court of Mainz, was of a contrary opinion and had ruled that there were no grounds for a fixed–term contract of the 36 year old goalie.

The problem

By law fixed-term employment agreements can be concluded for a fixed term up to a period of two* years without requiring an objective ground for the limitation, pursuant to Section 14 para 2 Part-Time and Fixed-Term Act (which implemented the EU directives 97/81/EG and 1999/70 EG), provided that the employee has not previously been employed with the employer within the last three years.

Once this period expires and the employer intends to further limit the term of the contract, an objective ground for this (second) limitation is required pursuant to Section 14 para 1 Part-Time and Fixed-Term Act. Such objective grounds can arise in particular, due to special characteristics of the work or also due to the employee’s wishes.

If an employer concludes a fixed-term contract without having an objective ground for such, the limitation is void and the contract is deemed to be an unlimited one (See Section 16 Part-time and Fixed-Term Act). Once an employer employs more than ten employees the Act Against Unfair Dismissal applies and removing an employee becomes significantly more difficult.

With regard to transfer periods, the uncertainty of the player’s future performance or the fan’s needs for variation, the option of concluding fixed-term agreements for football clubs is crucial and a consistent practice.

* Newly founded companies can conclude limited term contracts up to a period of four years without requiring an objective ground for the limitation.

The decision of the State Labour Court Mainz as the first instance

However, the first instance, the State Labour Court of Mainz had ruled on 19 March 2015 that there was no objective ground for limiting the contract of the goalkeeper which is why the employment did not end on the alleged date.

It denied that the characteristics of the work justified a limitation as it stated that signs of wear due to the activity (as argued by the Defendant) were discriminations of the age which violate the Equal Treatment Act. The Club further argued that grounds for the limitation lie within the commonness of the limitation in professional sports, the audience’s need for variation and the high salaries, however, neither of these arguments could convince the State Labour Court.

The Judgment of the Courts of Appeal

Unlike the first instance, the State Rhineland-Palatinate Labour Court, as the Court of Appeal, ruled that there was an objective ground for the limitation. In particular, the special characteristics of the work as a professional football player justified the limitation. Hence, the employment ended on the intended date on 30 June 2014.

Reactions from the sports industry

When the judgment was announced you could almost hear the collective sigh of relief of the football clubs throughout Germany. The judgment was widely considered as positive.

End of the story?

As of now it remains to be seen if the goalkeeper calls the next and final instance the Federal Labour Court or even the Court of Justice of the European Union.

Summary

Fixed-term contracts in professional football remain permissible.

It remains to be seen if the goalkeeper calls the Federal Labour Court or the Court of Justice of the European Union which will have the final say in this matter.

The judgment is also relevant for other fields of professional team sports such as basketball, handball, ice-hockey etc.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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Thorsten Kühnel

Associate

I am an employment law specialist with experience in commercial and corporate law.